The Effects of Specialization in Audit Workpaper Review on Review Efficiency and Reviewers' Confidence

1999 ◽  
Author(s):  
E. Michael Michael Bamber ◽  
Robert J. Ramsay
Keyword(s):  
Workpaper Review

Audit roles and the review process: workpaper preparers’ and reviewers’ differing perspectives

2019 ◽  
Vol 34 (4) ◽  
pp. 438-461 ◽  
Author(s):  
Brandon Ater ◽  
Christine Gimbar ◽  
J. Gregory Jenkins ◽  
Gabriel Saucedo ◽  
Nicole S. Wright
Keyword(s):  
Review Process ◽  
Future Research ◽  
Senior Managers ◽  
Data Set ◽  
Accounting Firms ◽  
Content Type ◽  
Face To Face ◽  
Process Characteristics ◽  
Workpaper Review ◽  
The Face

Purpose This paper aims to examine the perceptions of auditor roles on the workpaper review process in current audit practice. Specifically, the paper investigates how an auditor’s defined role leads to perceived differences in what initiates the workpaper review process, the preferred methods for performing reviews and the stylization or framing of communicated review comments. Design/methodology/approach A survey was administered in which practicing auditors were asked about workpaper review process prompts, methods and preferences. The survey was completed by 215 auditors from each of the Big 4 accounting firms and one additional international firm. The final data set consists of quantitative and qualitative responses from 25 audit partners, 33 senior managers, 30 managers, 75 in-charge auditors/seniors and 52 staff auditors. Findings Findings indicate reviewers and preparers differ in their perceptions of the review process based on their defined roles. First, reviewers and preparers differ in their perspectives on which factors initiate the review process. Second, the majority of reviewers and preparers prefer face-to-face communication when discussing review notes. Reviewers, however, are more likely to believe the face-to-face method is an effective way to discuss review notes and to facilitate learning, whereas preparers prefer the method primarily because it reduces back-and-forth communication. Finally, reviewers believe they predominantly provide conclusion-based review notes, whereas preparers perceive review notes as having both conclusion- and documentation-based messages. Research limitations/implications This paper advances the academic literature by providing a unique perspective on the review process. Instead of investigating a single staff level, it examines the workpaper review process on a broader scale. By obtaining views from professionals across all levels, this work intends to inspire future research directed at reconciling differences and filling gaps in the review process literature. The finding that reviewers and preparers engage in role conformity that leads to incongruent perceptions of the review process should encourage the consideration of mechanisms, with the potential to be tested experimentally, by which to reconcile the incongruities. Practical implications Results support recent regulator concerns that there are breakdowns in the workpaper review process, and the findings provide some insight into why these breakdowns are occurring. Incongruent perceptions of review process characteristics may be the drivers of these identified regulatory concerns. Originality/value This is the first study to examine current workpaper review processes at the largest accounting firms from the perspective of both preparers and reviewers. From this unique data set, one key interpretation of the findings is that workpaper preparers do not appear to recognize a primary goal of the review process: to ensure that subordinates receive appropriate coaching, learning and development. However, workpaper reviewers do, in fact, attempt to support preparers and work to create a supportive team environment.

An Investigation of the Effects of Specialization in Audit Workpaper Review

1997 ◽  
Vol 14 (3) ◽  
pp. 501-513 ◽  
Author(s):  
E. MICHAEL BAMBER ◽  
ROBERT J. RAMSAY
Keyword(s):  
Workpaper Review

The Effects of Audit Review Format on Review Team Judgments

2009 ◽  
Vol 28 (1) ◽  
pp. 95-111 ◽  
Author(s):  
Christopher P. Agoglia ◽  
Richard C. Hatfield ◽  
Joseph F. Brazel
Keyword(s):  
Quality Assessment ◽  
Audit Quality ◽  
Mediation Analyses ◽  
Face To Face ◽  
Audit Review ◽  
Documentation Quality ◽  
Review Team ◽  
Workpaper Review ◽  
Insight Into

SUMMARY: The promulgation of standards (e.g., PCAOB 2004b; IFAC 2008b) highlights the importance of workpaper documentation quality and its influence on audit quality. Our study matches audit workpaper preparers with reviewers to examine how alternative workpaper review methods affect sequential audit review team judgments through their impact on preparer workpaper documentation. While reviewers maintain the option of reviewing workpapers on site (“face-to-face review”), they can now also perform their reviews electronically from remote locations (“electronic review”) because of technological advancements such as email and electronic workpapers. Recent research has found that review mode can affect the judgments of auditors preparing the workpapers. Our study extends the literature by examining the extent to which review mode (electronic versus face-to-face) affects the quality of documentation in the workpapers and whether reviewers are able to discern and compensate for these documentation quality issues. Our results indicate that reviewers' judgments are ultimately affected by the form of review expected by their preparer. We test two alternative mediation models to provide insight into why the review format affects reviewer judgment quality. Mediation analyses suggest that the effect of review mode on reviewer judgments is mediated by a documentation quality assessment gap. Specifically, with electronic review, reviewers' burden to recognize and compensate for lower-quality documentation was generally greater, often resulting in lower-quality reviewer judgments than when the mode of review was face-to-face. These results suggest that the effect of review mode can persist to the reviewer's judgment through its influence on preparer workpaper documentation and the resulting documentation quality assessment gap.

The Effect of Risk of Misstatement and Workload Pressure on the Choice of Workpaper Review Format

2007 ◽  
Author(s):  
Christopher P. Agoglia ◽  
Joseph F. Brazel ◽  
Richard C. Hatfield ◽  
Scott B. Jackson
Keyword(s):  
Workpaper Review

Sprandel, Inc.: Electronic Workpapers, Audit Documentation, and Closing Review Notes in the Audit of Accounts Receivable

2018 ◽  
Vol 33 (2) ◽  
pp. 43-55 ◽  
Author(s):  
Lindsay M. Andiola ◽  
Tamara A. Lambert ◽  
Edward J. Lynch
Keyword(s):  
Learning Experience ◽  
Thinking Skills ◽  
Critical Thinking Skills ◽  
Professional Skepticism ◽  
Accounts Receivable ◽  
Workpaper Review ◽  
Hands On ◽  
Hands On Learning ◽  
Important Quality ◽  
Quality Control Mechanism

ABSTRACT Workpaper review is an important quality control mechanism in the audit environment. However, appropriately responding to review notes is not commonly taught. The Sprandel, Inc. case provides a hands-on learning experience for students to connect textbook audit knowledge through use of an activity regularly performed in audit practice: closing review notes. Through the process of closing review notes, students practice auditing accounts receivable, including performing audit procedures related to internal controls and substantive audit work. The case also provides students with an opportunity to use Excel to complete electronic workpapers and to document their audit procedures. Further, the case requires students to use critical-thinking skills and apply professional skepticism when performing audit procedures, evaluating audit evidence, and making decisions. Finally, this case helps students understand how auditing standards apply to the procedures performed during an audit of accounts receivable. The case is designed for auditing courses at the undergraduate or graduate level.

Electronic versus Face-to-Face Review: The Effects of Alternative Forms of Review on Auditors' Performance

2004 ◽  
Vol 79 (4) ◽  
pp. 949-966 ◽  
Author(s):  
Joseph F. Brazel ◽  
Christopher P. Agoglia ◽  
Richard C. Hatfield
Keyword(s):  
Alternative Methods ◽  
Control Group ◽  
Review Group ◽  
Face To Face ◽  
The Past ◽  
Audit Firms ◽  
Workpaper Review ◽  
Heuristic Systematic Model ◽  
Effectiveness And Efficiency ◽  
Audit Effectiveness

Due to recent technological advancements such as online workpapers and email, audit firms have alternative methods of workpaper review that they did not have in the past. While audit workpaper preparers typically know they will be reviewed, and know the form their review will take, prior research has focused on comparing the judgments of auditors who expect to be reviewed with auditors who expect to remain anonymous. This study examines the effects on preparers of using two different methods of review: face-to-face and electronic review. The study also compares both review groups to a no-review control group. Consistent with the Heuristic-Systematic Model, we find that the method of review affects preparer effectiveness and efficiency. Specifically, preparers anticipating a face-to-face review are more concerned with audit effectiveness, produce higher quality judgments, are less efficient at their task, are less likely to be influenced by prior year workpapers, and feel more accountable than preparers in both the electronic review and no-review conditions. Interestingly, electronic review preparers generally do not differ from the no-review group. These results suggest that how a review will be conducted, and not merely the expectation that a review will occur, affects the decision-maker's judgments and perceptions.

The Effect of Alternative Types of Review on Auditors’ Procedures and Performance

2010 ◽  
Vol 29 (1) ◽  
pp. 207-220 ◽  
Author(s):  
Elizabeth A. Payne ◽  
Robert J. Ramsay ◽  
E. Michael Bamber
Keyword(s):  
Quality Control ◽  
Path Analysis ◽  
Real Time ◽  
Behavioral Strategies ◽  
Workpaper Review ◽  
Different Types ◽  
Primary Means ◽  
And Performance ◽  
Audit Performance

SUMMARY: Audit workpaper review is a primary means of quality control in auditing firms. While prior research shows that anticipation of a review affects preparers’ judgments, there is little research on the effects of the different review formats that occur in practice. The research that does exist examines the effects of adding discussion after the preparation of written review notes. We compare the effects on preparers of anticipating a real-time interactive review (where review notes are not prepared in advance) to the effects of anticipating receipt of more traditional written review notes. We also examine how these two different types of review affect the actual audit procedures preparers perform. A path analysis reveals that an interactive review leads auditors to focus more on the cognitively demanding, conclusion-oriented audit procedures. This, in turn, leads to better performance in identifying a trend that is indicative of fraud. We find no evidence that dysfunctional behavioral strategies operate under the less structured interactive review to compromise audit performance.

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